Chapter 20 International Trade Agreements

Wilfred J. Ethier

A chapter in Contemporary and Emerging Issues in Trade Theory and Policy, 2008, pp 381-395 from Emerald Group Publishing Limited

Abstract: Over the last 60 years, multilateral trade liberalization has reduced tariffs to historically low levels. The dominant theory of multilateral trade agreements, based solely on terms-of-trade externalities between national governments, is the conventional wisdom among international trade theorists. But it features two defects that render it inconsistent with reality. This chapter proposes a simple formulation of the political economy of protection that dispenses with terms-of-trade externalities, predicts the properties that empirical work has confirmed, and is free of the counterfactual implications of the dominant approach. The model is applied to trade agreements.

Keywords: Trade agreements; the received theory; the terms-of-trade puzzle; the export-subsidy-transfer puzzle (search for similar items in EconPapers)
Date: 2008
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Persistent link: https://EconPapers.repec.org/RePEc:eme:fegzzz:s1574-8715(08)04020-7

DOI: 10.1016/S1574-8715(08)04020-7

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